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4 Oct 2018

UK Government Publishes Technical Notice Concerning the Regulation of Chemicals Under REACH

The purpose of the UK government’s Notices is to set out relevant information in order to allow businesses and citizens to understand what would need to be done in a “no deal” scenario, so they can make informed plans and preparations. With this, the government recognises that until a Withdrawal Agreement is signed and ratified by both the UK and EU Parliaments, it is still possible that the UK may leave the EU without a deal in March 2019.

This update will focus on the Technical Notice, published on 24 September 2018, concerning how businesses producing, registering, importing or exporting chemicals would be affected if the UK leaves the EU with no deal. The Notice sets out the arrangements for chemicals regulated under the EU’s REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) Regulation. It should be recalled that REACH applies not just to all of the EU Members States but also to the EEA countries that are not part of the EU, namely, Norway, Iceland and Liechtenstein (for convenience, references to the EU below also apply to these EEA countries).

As Hong Kong traders of all kinds of consumer goods will be aware, REACH covers the manufacture, import, placing on the market and use of chemical substances on their own, in mixtures or in articles. Note that registration of chemical substances does not apply to articles (i.e., finished products, e.g., electronics or toys) in which a substance is not intended to be released under normal or reasonably foreseeable conditions of use. However, REACH would apply to articles in which hazardous substances are present (if the substances are on the REACH “Candidate List”, or are restricted. As an example of the latter, certain phthalates are restricted in toys and childcare articles under REACH).

Within the REACH framework, companies are required to register chemical substances they use or trade in with the European Chemicals Agency (ECHA) before placing them on European markets. Companies must also obtain additional authorisation in order to trade in and/or use chemicals in the EU which are banned for sale or for use in the EU.

2. REACH obligations and non-EU companies

Companies established outside the EU, such as Hong Kong-based manufacturers exporting to the EU, cannot directly register their substances under REACH. According to the UK Technical Notice and the ECHA guidance for non-EU companies, the responsibility for fulfilling REACH requirements lies with the importers or affiliates established in the EU, or with the “Only Representative” (OR) of a non-EU manufacturer. ORs have to be established in the EU.

In order to gain and maintain EU market access, non-EU traders exporting into the EU are strongly recommended to appoint an OR. Established in the EU, an OR is appointed as an agent, acting to fulfil the importer’s REACH obligations, alleviating their regulatory burden. Moreover, non-EU companies are expected to provide any information as requested by importers and/or ORs to register the relevant substances. Appointing an OR might be particularly useful if non-EU manufacturers consider that providing such information directly to importers would require the disclosure of confidential business information.

Note, however, that if Hong Kong traders currently acting through a UK importer, affiliate or OR wish to maintain market access, arrangements for continued market access will require action before the UK leaves the EU.

3. Regulating chemicals in a “no-deal” scenario

Although the UK has stressed that a no-deal Brexit is unlikely, Hong Kong manufacturers will be relieved to know that the UK government is committed to ensuring that the UK has both the legislation and regulatory capacity in place to substantially replicate and replace the current EU regulatory framework. Under the new framework, companies will be able to register new chemicals with the equivalent UK authority – the Health and Safety Executive (HSE) – through a UK IT system similar to the existing EU system.

Businesses wishing to place new chemicals on the UK and EU markets in a no deal scenario will have to undertake two separate registration processes, at the UK authority and ECHA, respectively. However, Hong Kong traders should, it is expected, be minimally affected by this, as the information and data package required for registration will be identical in both processes.

In the event of a “no-deal” Brexit, Hong Kong businesses exporting into the EU through a UK importer, affiliate or OR, or simply exporting to the UK, should be aware of the following practical implications foreseen by the Technical Notice:

UK-established companies registered with REACH but wishing to continue trading in the EU will need to transfer their registrations to an EU-based importer, affiliate or OR, as the UK becomes a non-EU state.

For continuing trade within the UK, existing REACH registrations held by UK-based companies will be carried across (“grandfathered”) into the new UK registration system. Companies will have 2 years from March 2019 to provide the UK regulatory authority with the full data package that supported their original EU registration.

UK importers who do not hold a REACH registration will be able to continue trading through a light-touch notification process which allows businesses to notify the UK authority and provide some basic data on the relevant substances within 180 days of the UK leaving. The Notice stresses that this would only be an interim arrangement and importers would need to obtain full registration at a later date.

Existing ECHA authorisations to continue using higher-risk chemicals held by UK companies will be carried over. However, UK downstream users of authorised substances will no longer be able to rely on ECHA authorisation decisions addressed to EU companies.

With the above, the UK aims to minimise disruption to the supply in chemicals and reduce the risk posed to human health and the environment caused by Brexit by preserving REACH standards and obligations as far as possible.

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